How has my thinking on prizes vs. grants evolved?

Chris, a loyal MR reader, writes to me:

I’ve been turning to your insights on prizes vs. grants over the years. Your Google talk from 2007 is without question the best discussion I’ve found of their respective merits…I was wondering if your thinking on prizes vs. grants has evolved, and in particular [TC has added the numbers here]:

1. In the Google talk, you talked about an equilibrium in which there would be a growing ecosystem of big prizes complementing one another. I’m not sure it has turned out this way. Do you agree, and what happened? Did the “failure” of some high profile prizes (e.g. the Google Lunar XPrize) dampen down the enthusiasm?

2. More generally, there seemed to be an expectation in the 2000s and early 2010s that prizes would take off and become a more significant feature of the R&D funding landscape. Again, I don’t think that has really happened. What explains that?

3. Looking specifically at government funding of R&D, do you think there is an equilibrium in which grants can coexist with prizes? Or do grants squeeze out prizes through some form of adverse selection (the best researchers opting for grants over prizes)?

4. How important do you think public choice reasons are for us being in a grant-dominated equilibrium? It seems that the science sector has done a great job of positioning itself as something other than an interest group, with its interests squarely aligned with the public good. (Even suggesting that the science sector is also an interest group seems slightly heretical. It’s interesting that Dominic Cummings, for all his radicalism, seems to see little need for any reform of the science/research ecosystem beyond ARPA).

First a general remark: I now see the current scientific (and cultural) establishment as having more implicit prizes than I used to realize.  In fact, getting a grant is one of the biggest prizes you can receive, if the grant is sufficiently prestigious.  By an “implicit prizes,” I mean a prize where the target achievement is not quite spelled out, but if “we” (however defined) judge you to have achieved enough, we will pour grants, status, and high quality social networks into your lap.  For instance, Alex and I have received significant “prizes” for writing MR, although none of those prizes have names or bring explicit public recognition, as opposed to general recognition.  We have in contrast never received a grant to write MR, so are prizes really so under-provided?

So my current thinking is a bit less “grants vs. prizes,” and somewhat more “implicit prizes vs. explicit prizes, each combined with grants to varying degrees.”  Implicit prizes are more flexible, but they also are easier to cheat with, since the standard of achievement is never quite clear.  Implicit prizes also are much more valuable to people who can use, build, and exploit their social networks, and of course that is not everyone (but shouldn’t we be giving more prizes to those people?).  Implicit prizes also can be revoked through subsequent loss of status.  Implicit prizes are more likely “granted” by the hands of social networks rather than judging panels, all of those features being both cost and benefit.

Now to the specific points:

1. As the venture capital ecosystem grows, and as the value of publicity rises (it is easier to monetize scientific and other sources of fame), and there are more “influencers in the broad sense,” there are more implicit prizes to be had.  And did the Lunar XPrize fail?  If an end is not worth accomplishing, a prize is one way to find that out.

2. In addition to my point about the proliferation of implicit prizes, the scientific, academic, and political communities are far too conservative in the literal sense of that word.  How many top schools experiment with different tenure procedures?  Different ways of running a department?  It is sad how difficult it is to experiment with changes in academia and science, whether the topic be prizes or not.

3. The best researchers get both grants and prizes (one hopes).

By the way, here is a recent piece on the empirics of prizes, mostly positive results.

Comments

Do you think that prizes should be used more often for pharmaceutical development?

As long as they are not used to displace patents.

Off the cuff, isn't an "implicit prize" just an obfuscatory way of saying "benefit"? I'd argue that adding epicycles to a flawed model may make the fit better, but is most likely indicating a fundamental flaw in the theory. I think few people would agree that a prize (in the context of winning a defined competition ) shares much in common with the concept of a "benefit". But who knows, perhaps you can show why the term has utility. Do you think that in the future you will generalize "prize" even further and do away with the word "result"? Prize < Benefit < Result is not news.

No, not obfuscatory in the least. Public intellectuals aspire to raising discourse, and the first step is ensuring that words are used properly. As defined by twitter feeds or some such other rational modern way that represents progress, not stagnant complacency.

Different Chris here, but also interested in prizes. I guess agree with Tyler that established small scale researchers are somewhat motivated to do things if they think they will get future grants, so in that case there is some equivalence between grants and prizes. For instance you make work hard on your current research project if you think success will lead to further grants. But this is not going to work for businesses or unique style opportunities, like say find a virus for Cornonvirus. A corporation like GSK is going to need to spend maybe billions developing and testing a vaccine, they are not going to do that for the potential to earn some future research grants. Prizes also guarantee success payment, someone developing a new drug has the risk that the drug is no longer needed even if it works, or that not long after initial development, someone comes along with a me-too type drug, or that host governments will simply decide that the price demanded by the drug company is too high and then mandate a lower price.

The other thing that prizes do, that grants don't do, is encourage new entrants into the process. A drug company may have a great idea for a new vaccine approach, but if they have no track record it could really hard to get a grant to work on it. A prize gives that company an equal chance of winning versus already incumbent researchers. Generally speaking technology development is hard to predict up front (if it was predictable it wouldn't be research). So the more approaches tried the better. Grant givers can't afford to give grants to wacky ideas, because of agency risk to themselves. Prizes avoid that problem.

I’m having trouble seeing how “implicit prizes” are any different from good ol’ social status. Why the neologism?

"1. As the venture capital ecosystem grows, and as the value of publicity rises...."

Well, never extrapolate too much. There may be a trend reversal in the future and VC may become the most despised thing for some years.

Indeed, enjoying good status today is the best predictor of bad status in the future. The only way to avoid this is "no status". Be gray =)

In a world awash in capital with low interest rates and low inflation, VC will most definitely stick around. Don't fight the Fed as they say.

Not sure what is meant by the "venture capital ecosystem" or what is meant by "grows". It's become clear in the past two years that much of the billions that flooded tech did not come from wise U.S. investors, but from oligarchs and sheiks. I suppose that makes me more confident in the wise U.S. investors in tech: they haven't been funding the latest nonsense, the other dude did it. Meanwhile, Trump has spent three years defunding science and unfriending scientists, and has now put a man in charge of the government's coronavirus response who doesn't believe in science and whose main job is to prevent scientists from disclosing any information about the coronavirus that might reflect poorly on the great job Trump is doing. Is this what is meant by "public choice"?

"Even suggesting that the science sector is also an interest group seems slightly heretical. "

*slightly*???? suggesting to any academic that science is an interest group is a heresy. Even suggesting that the environmental lobby is an interest group is heresy.

=> "Chris, a loyal MR reader..."

ahh, a sorting of readers here into "loyal" ... and otherwise.

what are the categorization criteria ?

The criteria are simple - loyal, or rebel scum.

According to Heather MacDonald, foundations support mostly left wing causes. See Burden of Bad Ideas.

An xprize isn't really needed in most places because the market has an incentive to solve the problem. For example, if you come up with a way to storage energy at a price that is a tiny fraction of what Tesla can currently muster, then you will, literally, receive a price measured in hundreds of billions if not trillions of dollars.

A prize could make sense in areas that the market won't value UNTIL it's too late. For example, a vaccine for a pandemic than has a 1 in 100 chance of hitting in any year. But those (by definition) risky and will be subject to manipulation. In other words, govs will declare a pet cause they adore to be very important, and award xprizes to those that are politically friendly. You can see that already with where NSF grants go. Used to be for hard core science. Increasingly it's to politically correct causes deemed "important" (eg finding the 11 people left in the united states that would tell their daughter to NOT become a doctor).

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Wow. Details superb.

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